Impact of CEO Industry-Specific vs. General Managerial Experience on Firm Performance, Risk-taking Behavior and CEO Compensation

Title

Impact of CEO Industry-Specific vs. General Managerial Experience on Firm Performance, Risk-taking Behavior and CEO Compensation

Authors

Junnatun Naym

Files

Description

This paper investigates the impact of CEO cross-industry and specific-industry experience on firm performance, risk-taking behavior, and CEO compensation. Using hand-collected data for a large cross-section of CEOs over 1992-2017, I find that CEOs with cross-industry experience are not likely to help improve firm performance, tend to invest less on capital and R&D expenditure, and are likely to receive pay premium. On the other hand, CEOs with more industry experience tend to lower firm performance and receive a discounted pay, especially among high growth firms, which can be attributed to their excess investment in R&D. This paper contributes to the literature that examines the impact of CEO characteristics on firm performance and other firm outcomes by documenting the effect of cross-industry and specific-industry experience on these outcome variables.

Publication Date

2019

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Keywords

CEO, Industry Experience, Firm Performance, Risk Behavior, Compensation

Disciplines

Business

Impact of CEO Industry-Specific vs. General Managerial Experience on Firm Performance, Risk-taking Behavior and CEO Compensation

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